Mumbai: The Association of Mutual Funds in India (AMFI) has issued a white paper on the occasion of completing 30 years, titled “Empowering the Future – Mutual Funds: A Bridge to Financial Freedom and Vikasit Bharat”. The visionary document highlights the role of mutual funds in retirement planning for today’s working population, aiming to ensure financial freedom in their later years.
The AMFI white paper proposed the creation of a voluntary retirement scheme in India, managed by mutual funds, similar to the popular US 401(k) plan.
The proposed Mutual Fund–Voluntary Retirement Account (MF-VRA) would provide a voluntary, employer-linked retirement product managed by mutual funds. It would offer features such as voluntary participation, employer sponsorship, tax incentives, portability, and flexibility, the white paper said.
“This could unlock long-term capital for the economy and provide structured retirement security to a wider population,” it added.
Named after a section of the US Internal Revenue Code, the 401(k) is a defined-contribution plan provided by US employers. In a traditional 401(k), employee contributions are pre-tax, meaning they reduce taxable income, but withdrawals in retirement are taxed.
Globally, developed countries are adding another layer of individual pension planning as part of their multi-pillar pension systems, which include government social security supported by private pensions through defined contribution (DC) schemes, said Crisil Intelligence, the author of the white paper.
“The benefits of the MF-VRA scheme would be multifaceted — enhancing pension penetration and coverage in the country, positively impacting economic growth, and reducing the burden of social security on the exchequer,” the white paper noted.
The UN estimates that the number of Indians aged 60 years and above will nearly double by 2050 — far exceeding the entire elderly population of Europe. Therefore, pension coverage in India needs urgent expansion.
“This white paper is a reminder that retirement security must move from the periphery to the core of our financial priorities. It is a call for every working individual to start early, invest regularly, and stay the course,” said Navneet Munot, Chairman, AMFI.
“In doing so, these investments safeguard personal independence while channeling savings into productive capital, which fuels India’s growth,” Munot said.
“Rising life expectancy, evolving family structures, and growing aspirations have made retirement planning an essential life goal rather than a distant afterthought. The years beyond active work can now span decades — a phase that must be sustained by foresight, discipline, and prudent investing,” he argued.
“India is on an inspiring journey towards becoming a developed nation by 2047. Enabling every citizen to enjoy a retirement of dignity, independence, and peace of mind must be an integral part of that vision,” he added.
Venkat Nageswar Chalasani, Chief Executive of AMFI, said the widespread lack of preparedness for retirement poses a serious challenge, worsened by the absence of mandatory retirement savings provisions.
As per the white paper, there are currently 29 mutual fund retirement schemes in operation, with assets under management worth Rs 29,105 crore.